Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 13, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CHINA PHARMA HOLDINGS, INC. | |
Entity Central Index Key | 0001106644 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Shell Company | false | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 43,579,557 | |
Entity File Number | 001-34471 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 145,932 | $ 1,074,979 |
Restricted cash | 331,038 | 109,908 |
Banker's acceptances | 48,096 | 45,756 |
Trade accounts receivable, less allowance for doubtful accounts of $17,334,819 and $17,575,100, respectively | 855,084 | 635,371 |
Other receivables, less allowance for doubtful accounts of $22,320 and $22,729, respectively | 52,648 | 46,643 |
Advances to suppliers | 1,050,083 | 404 |
Inventory | 3,625,000 | 3,588,824 |
Prepaid expenses | 253,321 | 77,120 |
Total Current Assets | 6,361,202 | 5,579,005 |
Property and equipment, net | 15,768,241 | 16,313,827 |
Operating lease right of use asset | 112,447 | 136,779 |
Intangible assets, net | 193,774 | 205,611 |
TOTAL ASSETS | 22,435,664 | 22,235,222 |
Current Liabilities: | ||
Trade accounts payable | 847,760 | 1,366,330 |
Accrued expenses | 245,743 | 189,880 |
Other payables | 3,642,539 | 3,560,332 |
Advances from customers | 1,940,728 | 505,398 |
Other payables - related parties | 2,097,447 | 2,071,986 |
Operating lease liability, current portion | 90,974 | 91,306 |
Current portion of construction loan facility | 1,975,978 | 2,150,168 |
Bankers' acceptance notes payable | 331,038 | 109,908 |
Total Current Liabilities | 11,172,207 | 10,045,308 |
Non-current Liabilities: | ||
Construction loan facility | 2,117,119 | 2,150,168 |
Operating lease liability, net of current portion | 24,803 | 48,701 |
Deferred tax liability | 741,863 | 753,444 |
Total Liabilities | 14,055,992 | 12,997,621 |
Stockholders' Equity: | ||
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding | ||
Common stock, $0.001 par value; 95,000,000 shares authorized; 43,579,557 shares and 43,579,557 shares outstanding, respectively | 43,580 | 43,580 |
Additional paid-in capital | 23,590,204 | 23,590,204 |
Accumulated deficit | (26,633,299) | (25,972,402) |
Accumulated other comprehensive income | 11,379,187 | 11,576,219 |
Total Stockholders' Equity | 8,379,672 | 9,237,601 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 22,435,664 | $ 22,235,222 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Trade accounts receivable, less allowance for doubtful accounts | $ 17,334,819 | $ 17,575,100 |
Other receivables, less allowance for doubtful accounts | $ 22,320 | $ 22,729 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 95,000,000 | 95,000,000 |
Common stock, shares issued | 43,579,557 | 43,579,557 |
Common stock, shares outstanding | 43,579,557 | 43,579,557 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Revenue | $ 1,763,955 | $ 2,929,273 |
Cost of revenue | 1,569,516 | 2,272,743 |
Gross profit | 194,439 | 656,530 |
Operating expenses: | ||
Selling expenses | 326,095 | 478,691 |
General and administrative expenses | 388,559 | 428,817 |
Research and development expenses | 48,819 | 69,918 |
Bad debt expense | 30,246 | 13,312 |
Total operating expenses | 793,719 | 990,738 |
Loss from operations | (599,280) | (334,208) |
Other income (expense): | ||
Interest income | 386 | 3,257 |
Interest expense | (62,003) | (86,780) |
Net other expense | (61,617) | (83,523) |
Loss before income taxes | (660,897) | (417,731) |
Income tax expense | ||
Net loss | (660,897) | (417,731) |
Other comprehensive income - foreign currency translation adjustment | (197,032) | 835,865 |
Comprehensive income (loss) | $ (857,929) | $ 418,134 |
Loss per share: | ||
Basic and diluted | $ (0.02) | $ (0.01) |
Weighted average shares outstanding | 43,579,557 | 43,579,557 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total |
Beginning balance at Dec. 31, 2018 | $ 43,580 | $ 23,590,204 | $ (5,270,358) | $ 11,835,349 | $ 30,198,775 |
Beginning balance, shares at Dec. 31, 2018 | 43,579,557 | ||||
Net loss for the three months ended | (417,731) | (417,731) | |||
Foreign currency translation adjustment | 835,865 | 835,865 | |||
Ending balance at Mar. 31, 2019 | $ 43,580 | 23,590,204 | (5,688,089) | 12,671,214 | 30,616,909 |
Ending balance, shares at Mar. 31, 2019 | 43,579,557 | ||||
Beginning balance at Dec. 31, 2019 | $ 43,580 | 23,590,204 | (25,972,402) | 11,576,219 | 9,237,601 |
Beginning balance, shares at Dec. 31, 2019 | 43,579,557 | ||||
Net loss for the three months ended | (660,897) | (660,897) | |||
Foreign currency translation adjustment | (197,032) | (197,032) | |||
Ending balance at Mar. 31, 2020 | $ 43,580 | $ 23,590,204 | $ (26,633,299) | $ 11,379,187 | $ 8,379,672 |
Ending balance, shares at Mar. 31, 2020 | 43,579,557 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (660,897) | $ (417,731) |
Depreciation and amortization | 655,921 | 795,483 |
Bad debt expense | 30,246 | 13,312 |
Changes in assets and liabilities: | ||
Trade accounts and other receivables | (341,165) | (145,935) |
Advances to suppliers | (1,065,639) | (107,839) |
Inventory | (24,688) | 389,589 |
Trade accounts payable | (505,131) | 6,079 |
Accrued taxes payable | 52,503 | (51,879) |
Other payables and accrued expenses | 103,541 | (386,336) |
Change in bankers' acceptance notes payable | 226,206 | (326,983) |
Advances from customers | 1,465,030 | (12,285) |
Prepaid expenses | (180,082) | 8,065 |
Net Cash Provided by Operating Activities | (244,155) | (236,460) |
Cash Flows from Investing Activities: | ||
Purchases of property and equipment | (347,795) | (73,866) |
Net Cash Used in Investing Activities | (347,795) | (73,866) |
Cash Flows from Financing Activities: | ||
Payments of construction term loan | (143,286) | (148,227) |
Advances from related party | 36,293 | |
Payments of related party payables | (119,561) | |
Net Cash Used in Financing Activities | (106,993) | (267,788) |
Effect of Exchange Rate Changes on Cash | (8,974) | 55,484 |
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash | (707,917) | (522,630) |
Cash, Cash Equivalents and Restricted Cash at Beginning of Period | 1,184,887 | 2,460,527 |
Cash, Cash Equivalents and Restricted Cash at End of Period | 476,970 | 1,937,897 |
Cash and Cash Equivalents | 145,932 | 961,277 |
Restricted cash | 331,038 | 976,620 |
Cash, Cash Equivalents and Restricted Cash at End of Period | 476,970 | 1,937,897 |
Supplemental Cash Flow Information: | ||
Cash paid for income taxes | ||
Cash paid for interest | 57,044 | 80,693 |
Supplemental Noncash Investing and Financing Activities: | ||
Accounts receivable collected with banker's acceptances | 71,127 | 175,793 |
Inventory purchased with banker's acceptances | 68,037 | 145,614 |
Right-of-use assets obtained in exchange for operating lease obligations | $ 236,055 |
Organization and Significant Ac
Organization and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Operations – On December 31, 2012, China Pharma Holdings, Inc. consummated a reincorporation merger for the purpose of changing its state of incorporation from Delaware to Nevada, pursuant to the terms and conditions of an Agreement and Plan of Merger dated December 27, 2012. The reincorporation merger was approved by stockholders holding the majority of the Company's outstanding shares of common stock on December 21, 2012. Onny acquired 100% of the ownership in Helpson on May 25, 2005, by entering into an Equity Transfer Agreement with Helpson's three former shareholders. The transaction was approved by the Commercial Bureau of Hainan Province on June 12, 2005 and Helpson received the Certificate of Approval for Establishment of Enterprises with Foreign Investment in the PRC on the same day. Helpson received its business license evidencing its WFOE (Wholly Foreign Owned Enterprise) status on June 21, 2005. The Company has acquired and continues to acquire well-accepted medical formulas to add to its diverse portfolio of Western and Chinese medicines. Liquidity and Going Concern As of March 31, 2020, the Company had cash and cash equivalents of $0.1 million and an accumulated deficit of $26.6 million. The Company's Chairperson, Chief Executive Officer and Interim Chief Financial Officer has advanced an aggregate of $742,880 at March 31, 2020 to provide working capital and enable the Company's required payments related to its construction loan facility. The Company anticipates operating losses to continue for the foreseeable future due to, among other things, costs related to the production of its existing products, debt service costs and costs of selling and administrative organization. These conditions raise substantial doubt about its ability to continue as a going concern within one year after the date that the financial statements are issued. To alleviate the conditions that raise substantial doubt about the Company's ability to continue as a going concern, management plans to enhance the sales model of advance payment, and further strengthen its collection of accounts receivable. Further, the Company is currently exploring strategic alternatives to accelerate the launch of nutrition products. In addition, management believes that the Company's existing fixed assets can serve as collateral to support additional bank loans. As discussed in Note 14, in April 2020 the Company obtained a line of credit from a bank for an aggregate amount of RMB 10,000,000 (approximately $1.4 million), of which RMB 5,000,000 (approximately $0.7 million) have been advanced to the Company. While the current plans will allow the Company to fund its operations in the next twelve months, there can be no assurance that the Company will be able to achieve its future strategic alternatives raising substantial doubt about its ability to continue as a going concern. Pursuant to the requirements of Accounting Standards Codification (ASC) 205-40, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern Under ASC 205-40, the strategic alternatives being pursued by the Company cannot be considered probable at this time because none of the Company's current plans have been finalized at the time of the issuance of these financial statements and the implementation of any such plan is not probable of being effectively implemented as none of the plans are entirely within the Company's control. Accordingly, substantial doubt is deemed to exist about the Company's ability to continue as a going concern within one year after the date these financial statements are issued. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above. Consolidation and Basis of Presentation Helpson's functional currency is the Chinese Renminbi. Helpson's revenue and expenses are translated into United States dollars at the average exchange rate for the period. Assets and liabilities are translated at the exchange rate as of the end of the reporting period. Gains or losses from translating Helpson's financial statements are included in accumulated other comprehensive income, which is a component of stockholders' equity. Gains and losses arising from transactions denominated in a currency other than the functional currency of the entity that is party to the transaction are included in the results of operations. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. All significant intercompany transactions and balances are eliminated on consolidation. However, the results of operations included in such financial statements may not necessarily be indicative of annual results. Such financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on March 30, 2020 ("2019 Annual Report"). Accounting Estimates The Company uses the same accounting policies in preparing its quarterly and annual financial statements. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Cash and Cash Equivalents Restricted Cash Trade Accounts Receivable and Allowance for Doubtful Accounts – Trade accounts receivable that have been fully allowed for and determined to be uncollectible are charged against the allowance in the period the determination is made. The Company charged off uncollectible trade accounts receivable balances in the amount of $0 against the allowance for the three months ended March 31, 2020 and 2019, respectively. Customer balances outstanding for more than one year are allowed for at a greater rate than more current balances when calculating the allowance for doubtful accounts. Advances to Suppliers and Advances from Customers Inventory – Valuation of Long-Lived Assets – Property, Plant and Equipment – Revenue Recognition – The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company's contracts are fixed price and reflect standalone pricing for each items. Due to the nature of the products sold, there are no returns. Generally, the Company's performance obligations are transferred to customers at a point in time, typically upon buyer's designated carrier or the buyer picks up the goods at the Company's warehouse. For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all product revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adoption rules. The Company has received advance deposits for orders less than one year. These advances total $1,940,728 and $505,398 and are recorded as a liability on the accompanying balance sheet as "Advances from customers" at March 31, 2020 and December 31, 2019, respectively. Leases The discount rate used to measure a lease obligation should be the rate implicit in the lease; however, the Company's operating leases generally do not provide an implicit rate. Accordingly, the Company uses its incremental borrowing rate at lease commencement to determine the present value of lease payments. The incremental borrowing rate is an entity-specific rate which represents the rate of interest a lessee would pay to borrow on a collateralized basis over a similar term with similar payments. Cost of Revenues – Research and Development – Basic and Diluted Loss per Common Share There were no potentially dilutive common shares outstanding during the three months ended March 31, 2020 and 2019, respectively. Credit Risk The Company has its cash in bank deposits primarily at state owned banks located in the PRC. Historically, deposits in PRC banks have been secured due to the state policy of protecting depositors' interests. The PRC promulgated a Bankruptcy Law in August 2006, effective June 1, 2007, which contains provisions for the implementation of measures for the bankruptcy of PRC banks. Company bank accounts in China are not subject to a certain insurance coverage and will follow the provisions set forth in the PRC Bankruptcy Law should any bank where the Company has accounts declare bankruptcy. Interest Rate Risk Reclassification Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated through issuance of ASUs. Unless otherwise discussed, the Company believes that the recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on its consolidated financial statements upon adoption. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 2 – INVENTORY Inventory consisted of the following: March 31, December 31, 2020 2019 Raw materials $ 1,923,368 $ 2,113,994 Work in process 256,151 314,231 Finished goods 1,445,481 1,160,599 Total Inventory $ 3,625,000 $ 3,588,824 |
Property, Plant and Equipment
Property, Plant and Equipment | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | NOTE 3 – PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following: March 31, December 31, 2020 2019 Permit of land use $ 397,549 $ 403,755 Building 9,231,708 9,375,817 Plant, machinery and equipment 26,245,097 26,309,262 Motor vehicle 303,595 308,334 Office equipment 216,093 217,058 Total 36,394,042 36,614,226 Less: accumulated depreciation (20,625,801 ) (20,300,399 ) Property and Equipment, net $ 15,768,241 $ 16,313,827 Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows: Asset Life - years Permit of land use 40 - 70 Building 20 - 49 Plant, machinery and equipment 5 - 10 Motor vehicle 5 - 10 Office equipment 3-5 Depreciation relating to office equipment was included in general and administrative expenses, while all other depreciation was included in cost of revenue. Depreciation expense was $647,113 and $772,861 for the three months ended March 31, 2020 and 2019, respectively. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 4 - INTANGIBLE ASSETS Intangible assets represent the cost of medical formulas approved for production by the National Medical Products Administration (the “NMPA”, formerly China Food and Drug Administration, CFDA). The Company did not obtain NMPA production approval for any new medical formulas during the three months ended March 31, 2020 and 2019 and no costs were reclassified from advances to intangible assets during the three months ended March 31, 2020 and 2019, respectively. Approved medical formulas are amortized from the date NMPA approval is obtained over their individually identifiable estimated useful life, which range from ten to thirteen years. It is at least reasonably possible that a change in the estimated useful lives of the medical formulas could occur in the near term due to changes in the demand for the drugs and medicines produced from these medical formulas. Amortization expense relating to intangible assets was $8,808 and $22,622 for the three months ended March 31, 2020 and 2019, respectively, which was included in the general and administrative expenses. Medical formulas typically do not have a residual value at the end of their amortization period. The Company evaluates each approved medical formula for impairment at the date of NMPA approval, when indications of impairment are present and also at the date of each financial statement. The Company’s evaluation is based on an estimated undiscounted net cash flow model, which considers currently available market data for the related drug and the Company’s estimated market share. If the carrying value of the medical formula exceeds the estimated future net cash flows, an impairment loss is recognized for the excess of the carrying value over the fair value of the medical formula, which is determined by the estimated discounted future net cash flows. No impairment loss was recognized during the three months ended March 31, 2020 and 2019. Intangible assets consisted solely of NMPA approved medical formulas as follows: March 31, December 31, 2020 2019 Gross carrying amount $ 4,764,738 $ 4,839,117 Accumulated amortization (4,570,964 ) (4,633,506 ) Net carrying amount $ 193,774 $ 205,611 |
Advances for Purchases of Intan
Advances for Purchases of Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Advances for Purchases of Intangible Assets [Abstract] | |
ADVANCES FOR PURCHASES OF INTANGIBLE ASSETS | NOTE 5 – ADVANCES FOR PURCHASES OF INTANGIBLE ASSETS In order to expand the number of medicines the Company manufactured and marketed, it entered into contracts with independent laboratories and others for the purchase of medical formulas. Although NMPA approval had not been obtained for these medical formulas at the dates of the respective contracts, the objective of the contracts was for the Company to purchase NMPA-approved medical formulas once the NMPA approval process is completed. The Company holds the title to one valid patent that is related to one of its medical formulas. With respect to the other patent title the Company held, the management decided not to renew the patent during 2019 as it did not have any practical value because the related advance purchase to this pipeline product was written off as of December 31, 2018. Prior to entering into contracts with the Company, laboratories are typically required to complete all research and development to determine the content of the medical formula and the method to produce the generic medicine. The application to the NMPA for production approval must be made by the production facility that will produce the related product. As a result, a contract typically provides that the Company buys the medical formula from the laboratory and the laboratory is required to assist the Company in applying for and obtaining the production approval from the NMPA. In order to promote the standard of the pharmaceutical industry in China in line with international standards, significant changes have taken place in the policies and regulations in this industry in recent years. A series of policies on consistency evaluation and drug review process have been issued, and more potential reforms and adjustments are underway. In this context, the Company believes that the uncertainties in the timetables for obtaining NMPA production approvals for products under research are increasing. Under the new regulations and policy environment, the criteria for formulations’ development are more stringent. The Company must supplement and improve the corresponding processes and standards to meet the latest requirements of NMPA in accordance with the requirements of consistency evaluation. As a result, the Company anticipates an extended timeline on the approval process of its current pipeline products. Under the terms of the contracts, the laboratories are required to assist the Company in obtaining production approval for the medical formulas from the NMPA. Management monitors the status of each medical formula on a regular basis in order to assess whether the laboratories are performing adequately under the contracts. If a medical product is not approved by the NMPA, as evidenced by their issuance of a denial letter, or if the laboratory breaches the contract, the laboratory is required under the contract to provide a refund to the Company of the full amount of the payments made to the laboratory for that formula, or the Company can require the application of those payments to another medical formula with the same laboratory. As a result of the refund right, the Company is ultimately purchasing an approved medical product. Accordingly, payments made prior to the issuance of production approval by the NMPA are recorded as advances for purchases of intangible assets. To date, no formula has failed to receive NMPA production approval nor has the Company been informed or been made aware of any formula that may fail to receive such approval. However, there is no assurance that the medical products will receive production approval, and if the Company does not receive such approval, it will enforce its contractual rights to receive a refund from the laboratory or have the payments applied to another medical formula with the same laboratory. The management determined to impair all remaining advances at December 31, 2019, but may resume the development of these formulas in the future if sufficient funding and other favorable conditions arise. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 6 – RELATED PARTY TRANSACTIONS A member of the Company’s board of directors (“Board”) had previously advanced to the Company an aggregate amount of $1,354,567 as of March 31, 2020 and December 31, 2019 which are recorded as “Other payables – related parties” on the accompanying condensed consolidated balance sheets. The advances bear interest at a rate of 1.0% per year. Total interest expense for each of the three months ended March 31, 2020 and 2019 was $3,386 and $3,386, respectively. The Company received advances totaling $25,461 during the three months ended March 31, 2020 from its Chairperson, Chief Executive Officer and Interim Chief Financial Officer. Total amounts owed were $742,880 and $717,419 and are recorded as Other payables – related parties on the accompanying condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019, respectively. On July 8, 2019 the Company entered into a loan agreement in exchange for cash of RMB 4,770,000 ($674,405) with its Chairperson, Chief Executive Officer and Interim Chief Financial Officer. The loan bears interest at a rate of 4.35% and is payable within one year of the loan agreement. Total interest expense related to the loan for the three months ended March 31, 2020 and 2019 was $7,433. Compensation payable to the Chairperson, Chief Executive Officer and Interim Chief Financial Officer is included in Other payables in the accompanying condensed consolidated balance sheet totaling $2,311,986 and $2,307,986 as of March 31, 2019 and December 31, 2019, respectively. |
Banker's Acceptance Notes Payab
Banker's Acceptance Notes Payable | 3 Months Ended |
Mar. 31, 2020 | |
Banker's Acceptance Notes Payable [Abstract] | |
BANKER'S ACCEPTANCE NOTES PAYABLE | NOTE 7 – BANKER'S ACCEPTANCE NOTES PAYABLE In April 2016, the Company entered into a Banker's Acceptance Note Agreement with a bank. Pursuant to the terms of the agreement, the Company can issue banker's acceptance notes to any third party as payment of amounts owing to that third party. The Company is required to deposit with the bank an amount equal to the amounts represented by the banker's acceptance notes issued to the third parties. The amount of these deposited balances is shown as "Restricted cash" on the accompanying balance sheets as of March 31, 2020 and December 31, 2019. The maximum amount that the Company can issue under this agreement is limited to the lesser of RMB30,000,000 (approximately $4.5 million) or the amount of cash available to deposit against the banker's acceptance notes. In addition, the agreement calls for the payment of fees equal to 0.05% of the note amount to the bank. As of March 31, 2020 and December 31, 2019, the Company had outstanding banker's acceptance notes in the amount of $331,038 and $109,908, respectively. |
Construction Loan Facility
Construction Loan Facility | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
CONSTRUCTION LOAN FACILITY | NOTE 8 – CONSTRUCTION LOAN FACILITY The Company obtained a construction loan facility, dated June 21, 2013, in the aggregate amount of RMB 80,000,000 (approximately $13 million). The loan facility is for an eight-year term, which commenced on July 11, 2013, the initial draw-down date. The proceeds of the loan were used for and are collateralized by the construction of the Company's new production facility and the included production line equipment and machinery. The loan bears interest based upon 110% of the PRC government's eight-year term rate effective on the actual draw-down date, subject to annual adjustments based on 110% of the floating rate for the same type of loan on the anniversary from the draw-down date and its subsequent anniversary dates. The interest rate has remained at 5.39% on the anniversary dates which were July 10, 2017, 2018 and 2019, respectively. The loan required interest only payments for the first two years. Beginning July 11, 2015, the principal was due in at least two (2) annual installments with the first annual payment being due within six month period after July 10, 2015 and the second annual payment being due July 10, 2016 and each following year over the next five years through July 11, 2021 on the identical terms as described above for 2015. The Company has made all required payments due under the loan. As of March 31, 2020, the Company had no additional amounts available to it under this facility. During the three months ended March 31, 2020, the Company made principal payments in the amount of $143,286 (RMB 1,000,000). Principal payments required for the remaining term of the loan facility as of March 31, 2020 are as follows: Year Amount 2020 $ 1,975,978 2021 2,117,119 $ 4,093,097 Fair Value of Construction Loan Facility |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
LEASES | NOTE 9 - LEASES The Company has leases for certain office and production facilities in the PRC which are classified as operating leases. The leases contain payment terms for fixed amounts. Options to extend are recognized as part of the lease liabilities and recognized as right to use assets when management estimates to renew the lease. There are no residual value guarantees, no variable lease payments, and no restrictions or covenants imposed by leases. The discount rate used in measuring the lease liabilities and right of use assets was determined by reviewing the Company's incremental borrowing rate at the initial measurement date. For the three months ended March 31, 2020 and 2019, operating lease cost was $22,229 and $23,346, respectively and cash paid for amounts included in the measurement of lease liabilities for operating cash flows from operating leases was $23,627 and $24,814, respectively. As of March 31, 2020 and December 31, 2019, the Company reported operating lease right of use assets of $112,447 and $136,779, respectively and operating use liabilities of $115,777 and $140,007, respectively. As of March 31, 2020, its operating leases had a weighted average remaining lease term of 1.27 years and a weighted average discount rate of 4.75%. Minimum lease payments for the Company's operating lease liabilities were as follows for the twelve month periods ended March 31: 2020 94,510 2021 25,010 Total undiscounted cash flows 119,520 Less: Imputed interest (3,743 ) 115,777 Less: Operating lease liabilities, current portion (90,974 ) Operating lease liabilities, net of current portion 24,803 The Company has leases with terms less than one year for certain provincial sales offices that are not material. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 10 - INCOME TAXES Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The effect of a change in tax laws or rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Liabilities are established for uncertain tax positions expected to be taken in income tax returns when such positions are judged to meet the "more-likely-than-not" threshold based on the technical merits of the positions. Estimated interest and penalties related to uncertain tax positions are included as a component of other expenses. Through December 31, 2019, the Company has not identified any uncertain tax positions that it has taken. U.S. income tax returns for the years ended December 31, 2016 through December 31, 2019 and the Chinese income tax return for the year ended December 31, 2019 are open for possible examination. Under the current tax law in the PRC, the Company is and will be subject to the enterprise income tax rate of 25%. There was no provision for income taxes for the three months ended March 31, 2020 and 2019 respectively due to continued net losses of the Company. As of March 31, 2020, the Company had net operating loss carryforwards for PRC tax purposes of approximately $50.4 million which are available to offset any future taxable income through 2025. Approximately $21.6 million of these carryforwards will expire in December 2020. The Company also has net operating losses for United States federal income tax purposes of approximately $6.3 million of which $5.1 million are available to offset future taxable income, if any, through 2039, and $1.2 million are available for carryforward indefinitely subject to a limitation of 80% of taxable income for each tax year. Recent U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the "U.S. Tax Reform"), was signed into law on December 22, 2017. The U.S. Tax Reform significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those differences become deductible or tax loss carry forwards are utilized. Management considers projected future taxable income and tax planning strategies in making this assessment. Based upon an assessment of the level of historical taxable income and projections for future taxable income over the periods on which the deferred tax assets are deductible or can be utilized, management believes it is not likely for the Company to realize all benefits of the deferred tax assets as of March 31, 2020 and December 31, 2019. Therefore, the Company provided for a valuation allowance against its deferred tax assets of $30,461,103 and $30,759,656 as of March 31, 2020 and December 31, 2019, respectively. The Company also incurred various other taxes, comprised primarily of business taxes, value-added taxes, urban construction taxes, education surcharges and others. Any unpaid amounts are reflected on the balance sheets as accrued taxes payable. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 11 – FAIR VALUE MEASUREMENTS Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, a hierarchy has been established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities; Level 2 – Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data; and Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. The Company uses fair value to measure the value of the banker's acceptance notes it holds at March 31, 2020 and December 31, 2019. The banker's acceptance notes are recorded at cost which approximates fair value. The Company held the following assets and liabilities recorded at fair value: Fair Value Measurements at March 31, Reporting Date Using Description 2020 Level 1 Level 2 Level 3 Banker's acceptance notes $ 48,096 $ - $ 48,096 $ - Total $ 48,096 $ - $ 48,096 $ - Fair Value Measurements at December 31, Reporting Date Using Description 2019 Level 1 Level 2 Level 3 Banker's acceptance notes $ 45,756 $ - $ 45,756 $ - Total $ 45,756 $ - $ 45,756 $ - |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 12 - STOCKHOLDERS' EQUITY The Company is authorized to issue 95,000,000 shares of common stock, $0.001 par value, and 5,000,000 shares of preferred stock, $0.001 par value. The preferred stock may be issued in series with such designations, preferences, stated values, rights, qualifications or limitations as determined solely by the Company's Board. Employee Stock Options 2010 Incentive Plan On November 12, 2010, the Company's Board adopted the Company's 2010 Incentive Plan (the "Plan"), which was then approved by stockholders on December 22, 2010. On October 17, 2019, the Board of Directors approved the First Amendment to the 2010 Incentive Plan (the "Amendment"), pursuant to which the term of the 2010 Incentive Plan was extended to December 31, 2029. The Amendment was adopted by the shareholders on December 19, 2019. The Plan gave the Company the ability to grant stock options, restricted stock, stock appreciation rights and performance units to its employees, directors and consultants, or those who will become employees, directors and consultants of the Company and/or its subsidiaries. The Plan currently allows for equity awards of up to 4,000,000 shares of common stock. Through March 31, 2020, there were 175,000 shares of restricted stock granted and outstanding under the Plan. No options were outstanding as of March 31, 2020 under the Plan. There were no securities issued from the Plan during each of the three months ended March 31, 2020 and 2019. The Company recognized no compensation expense related to the awards of common shares and the grants and modifications of stock options during each of the three months ended March 31, 2020 and 2019. The fair value of each option award is estimated on the date of grant using the Black-Scholes Option Pricing Model. Expected volatility is based on the historical volatility of the Company's common stock prices. The Company uses historical data to estimate employee termination rates. The expected term of options granted is determined by the simplified method, which is one-half of the original contractual term. The simplified method is used due to the lack of historical share option exercise data to provide a reasonable basis upon which to estimate expected term. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. As of March 31, 2020, there was no remaining unrecognized compensation expense related to stock options or restricted stock grants. |
Risks & Uncertainties
Risks & Uncertainties | 3 Months Ended |
Mar. 31, 2020 | |
Risks & Uncertainties [Abstract] | |
RISKS & UNCERTAINTIES | NOTE 13 – RISKS & UNCERTAINTIES Current vulnerability due to certain concentrations For the year ended March 31, 2020, no customer accounted for more than 10% of sales and one customer accounted for 10.6% of accounts receivable. Two suppliers accounted for 45.2% and 18.8% of raw material purchases, and three different products accounted for 35.8%, 29.0% and 14.4% of revenue. For the three months ended March 31, 2019, no customer accounted for more than 10% of sales and two customers accounted for 49.3% and 10.6% of accounts receivable. Three suppliers accounted for 26.7%, 20.6% and 11.0% of the Company's raw material purchases, and three different products accounted for 35.0%, 24.5% and 17.0% of revenue. Nature of Operations Impact from the New Coronavirus Global Pandemic ("COVID-19") Economic environment - In addition, all of the Company's revenue is denominated in the PRC's currency of Renminbi (RMB), which must be converted into other currencies before remittance out of the PRC. Both the conversion of RMB into foreign currencies and the remittance of foreign currencies abroad require approval of the PRC government. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 14 – SUBSEQUENT EVENTS In April 2020, the Company obtained a line of credit from Postal Savings Bank of China for an aggregate amount of RMB 10,000,000 (approximately $1.4 million), of which RMB 5,000,000 (approximately $0.7 million) have been advanced. The loan bears interest at a rate of 4.25% per annum. Advances on the line of credit are due two years from the date of the advance. A third party company has guaranteed the loan as being a second priority creditor in the collateral in certain land use rights and buildings next to the creditor of the construction loan facility as discussed in Note 8. In addition, the Company's Chief Executive Officer and Chair of the Board personally guaranteed the new line of credit. The Company has an additional RMB 5,000,000 (approximately $0.7 million) available under the line, subject to a risk review and approval by the third party guarantee company. |
Organization and Significant _2
Organization and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Organization and Nature of Operations | Organization and Nature of Operations – On December 31, 2012, China Pharma Holdings, Inc. consummated a reincorporation merger for the purpose of changing its state of incorporation from Delaware to Nevada, pursuant to the terms and conditions of an Agreement and Plan of Merger dated December 27, 2012. The reincorporation merger was approved by stockholders holding the majority of the Company’s outstanding shares of common stock on December 21, 2012. Onny acquired 100% of the ownership in Helpson on May 25, 2005, by entering into an Equity Transfer Agreement with Helpson’s three former shareholders. The transaction was approved by the Commercial Bureau of Hainan Province on June 12, 2005 and Helpson received the Certificate of Approval for Establishment of Enterprises with Foreign Investment in the PRC on the same day. Helpson received its business license evidencing its WFOE (Wholly Foreign Owned Enterprise) status on June 21, 2005. The Company has acquired and continues to acquire well-accepted medical formulas to add to its diverse portfolio of Western and Chinese medicines. |
Liquidity and Going Concern | Liquidity and Going Concern As of March 31, 2020, the Company had cash and cash equivalents of $0.1 million and an accumulated deficit of $26.6 million. The Company's Chairperson, Chief Executive Officer and Interim Chief Financial Officer has advanced an aggregate of $742,880 at March 31, 2020 to provide working capital and enable the Company's required payments related to its construction loan facility. The Company anticipates operating losses to continue for the foreseeable future due to, among other things, costs related to the production of its existing products, debt service costs and costs of selling and administrative organization. These conditions raise substantial doubt about its ability to continue as a going concern within one year after the date that the financial statements are issued. To alleviate the conditions that raise substantial doubt about the Company's ability to continue as a going concern, management plans to enhance the sales model of advance payment, and further strengthen its collection of accounts receivable. Further, the Company is currently exploring strategic alternatives to accelerate the launch of nutrition products. In addition, management believes that the Company's existing fixed assets can serve as collateral to support additional bank loans. As discussed in Note 14, in April 2020 the Company obtained a line of credit from a bank for an aggregate amount of RMB 10,000,000 (approximately $1.4 million), of which RMB 5,000,000 (approximately $0.7 million) have been advanced to the Company. While the current plans will allow the Company to fund its operations in the next twelve months, there can be no assurance that the Company will be able to achieve its future strategic alternatives raising substantial doubt about its ability to continue as a going concern. Pursuant to the requirements of Accounting Standards Codification (ASC) 205-40, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern Under ASC 205-40, the strategic alternatives being pursued by the Company cannot be considered probable at this time because none of the Company's current plans have been finalized at the time of the issuance of these financial statements and the implementation of any such plan is not probable of being effectively implemented as none of the plans are entirely within the Company's control. Accordingly, substantial doubt is deemed to exist about the Company's ability to continue as a going concern within one year after the date these financial statements are issued. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above. |
Consolidation and Basis of Presentation | Consolidation and Basis of Presentation Helpson’s functional currency is the Chinese Renminbi. Helpson’s revenue and expenses are translated into United States dollars at the average exchange rate for the period. Assets and liabilities are translated at the exchange rate as of the end of the reporting period. Gains or losses from translating Helpson’s financial statements are included in accumulated other comprehensive income, which is a component of stockholders’ equity. Gains and losses arising from transactions denominated in a currency other than the functional currency of the entity that is party to the transaction are included in the results of operations. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. All significant intercompany transactions and balances are eliminated on consolidation. However, the results of operations included in such financial statements may not necessarily be indicative of annual results. Such financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on March 30, 2020 (“2019 Annual Report”). |
Accounting Estimates | Accounting Estimates The Company uses the same accounting policies in preparing its quarterly and annual financial statements. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Restricted Cash | Restricted Cash |
Trade Accounts Receivable and Allowance for Doubtful Accounts | Trade Accounts Receivable and Allowance for Doubtful Accounts – Trade accounts receivable that have been fully allowed for and determined to be uncollectible are charged against the allowance in the period the determination is made. The Company charged off uncollectible trade accounts receivable balances in the amount of $0 against the allowance for the three months ended March 31, 2020 and 2019, respectively. Customer balances outstanding for more than one year are allowed for at a greater rate than more current balances when calculating the allowance for doubtful accounts. |
Advances to Suppliers and Advances from Customers | Advances to Suppliers and Advances from Customers |
Inventory | Inventory – |
Valuation of Long-Lived Assets | Valuation of Long-Lived Assets – |
Property, Plant and Equipment | Property, Plant and Equipment – |
Revenue Recognition | Revenue Recognition – The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company’s contracts are fixed price and reflect standalone pricing for each items. Due to the nature of the products sold, there are no returns. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon buyer’s designated carrier or the buyer picks up the goods at the Company’s warehouse. For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all product revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adoption rules. The Company has received advance deposits for orders less than one year. These advances total $1,940,728 and $505,398 and are recorded as a liability on the accompanying balance sheet as “Advances from customers” at March 31, 2020 and December 31, 2019, respectively. |
Leases | Leases The discount rate used to measure a lease obligation should be the rate implicit in the lease; however, the Company’s operating leases generally do not provide an implicit rate. Accordingly, the Company uses its incremental borrowing rate at lease commencement to determine the present value of lease payments. The incremental borrowing rate is an entity-specific rate which represents the rate of interest a lessee would pay to borrow on a collateralized basis over a similar term with similar payments. |
Cost of Revenues | Cost of Revenues – |
Research and Development | Research and Development – |
Basic and Diluted Loss per Common Share | Basic and Diluted Loss per Common Share There were no potentially dilutive common shares outstanding during the three months ended March 31, 2020 and 2019, respectively. |
Credit Risk | Credit Risk The Company has its cash in bank deposits primarily at state owned banks located in the PRC. Historically, deposits in PRC banks have been secured due to the state policy of protecting depositors’ interests. The PRC promulgated a Bankruptcy Law in August 2006, effective June 1, 2007, which contains provisions for the implementation of measures for the bankruptcy of PRC banks. Company bank accounts in China are not subject to a certain insurance coverage and will follow the provisions set forth in the PRC Bankruptcy Law should any bank where the Company has accounts declare bankruptcy. |
Interest Rate Risk | Interest Rate Risk |
Reclassification | Reclassification |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated through issuance of ASUs. Unless otherwise discussed, the Company believes that the recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on its consolidated financial statements upon adoption. |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | March 31, December 31, 2020 2019 Raw materials $ 1,923,368 $ 2,113,994 Work in process 256,151 314,231 Finished goods 1,445,481 1,160,599 Total Inventory $ 3,625,000 $ 3,588,824 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | March 31, December 31, 2020 2019 Permit of land use $ 397,549 $ 403,755 Building 9,231,708 9,375,817 Plant, machinery and equipment 26,245,097 26,309,262 Motor vehicle 303,595 308,334 Office equipment 216,093 217,058 Total 36,394,042 36,614,226 Less: accumulated depreciation (20,625,801 ) (20,300,399 ) Property and Equipment, net $ 15,768,241 $ 16,313,827 |
Schedule of depreciation is computed on straight-line basis over estimated useful lives of assets | Asset Life - years Permit of land use 40 - 70 Building 20 - 49 Plant, machinery and equipment 5 - 10 Motor vehicle 5 - 10 Office equipment 3-5 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | March 31, December 31, 2020 2019 Gross carrying amount $ 4,764,738 $ 4,839,117 Accumulated amortization (4,570,964 ) (4,633,506 ) Net carrying amount $ 193,774 $ 205,611 |
Construction Loan Facility (Tab
Construction Loan Facility (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of principal payments | Year Amount 2020 $ 1,975,978 2021 2,117,119 $ 4,093,097 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Schedule of minimum lease payments for the company's operating leases liabilitie | 2020 94,510 2021 25,010 Total undiscounted cash flows 119,520 Less: Imputed interest (3,743 ) 115,777 Less: Operating lease liabilities, current portion (90,974 ) Operating lease liabilities, net of current portion 24,803 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities recorded at fair value | Fair Value Measurements at March 31, Reporting Date Using Description 2020 Level 1 Level 2 Level 3 Banker's acceptance notes $ 48,096 $ - $ 48,096 $ - Total $ 48,096 $ - $ 48,096 $ - Fair Value Measurements at December 31, Reporting Date Using Description 2019 Level 1 Level 2 Level 3 Banker's acceptance notes $ 45,756 $ - $ 45,756 $ - Total $ 45,756 $ - $ 45,756 $ - |
Organization and Significant _3
Organization and Significant Accounting Policies (Details) | Apr. 30, 2020USD ($) | Apr. 30, 2020CNY (¥) | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Apr. 30, 2020CNY (¥) | Dec. 31, 2019USD ($) | Jun. 21, 2013USD ($) | Jun. 21, 2013CNY (¥) | May 25, 2005 |
Organization and Significant Accounting Policies (Textual) | |||||||||
Cash and cash equivalents | $ 100,000 | ||||||||
Accumulated deficit | 26,600,000 | ||||||||
Construction loan facility amount | $ 13,000,000 | ||||||||
Bad debt expense | 30,246 | $ 13,312 | |||||||
Trade accounts receivable | 0 | $ 0 | |||||||
Advances from customers | 1,940,728 | $ 505,398 | |||||||
RMB [Member] | |||||||||
Organization and Significant Accounting Policies (Textual) | |||||||||
Construction loan facility amount | ¥ | ¥ 80,000,000 | ||||||||
Subesequent Event [Member] | |||||||||
Organization and Significant Accounting Policies (Textual) | |||||||||
Line of credit, description | Line of credit from a bank for an aggregate amount of RMB 10,000,000 (approximately $1.4 million), of which RMB 5,000,000 (approximately $0.7 million) have been advanced to the Company. | Line of credit from a bank for an aggregate amount of RMB 10,000,000 (approximately $1.4 million), of which RMB 5,000,000 (approximately $0.7 million) have been advanced to the Company. | |||||||
Aggregate amount loan | $ 1,400,000 | ||||||||
Loan received | $ 700,000 | ||||||||
Subesequent Event [Member] | RMB [Member] | |||||||||
Organization and Significant Accounting Policies (Textual) | |||||||||
Aggregate amount loan | ¥ | ¥ 10,000,000 | ||||||||
Loan received | ¥ | ¥ 5,000,000 | ||||||||
Management [Member] | |||||||||
Organization and Significant Accounting Policies (Textual) | |||||||||
Working capital | $ 742,880 | ||||||||
British Virgin Islands Corporation [Member] | |||||||||
Organization and Significant Accounting Policies (Textual) | |||||||||
Equity method investment, ownership percentage | 100.00% | ||||||||
Nevada Corporation [Member] | |||||||||
Organization and Significant Accounting Policies (Textual) | |||||||||
Equity method investment, ownership percentage | 100.00% | ||||||||
Onny [Member] | |||||||||
Organization and Significant Accounting Policies (Textual) | |||||||||
Equity method investment, ownership percentage | 100.00% |
Inventory (Details)
Inventory (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,923,368 | $ 2,113,994 |
Work in process | 256,151 | 314,231 |
Finished goods | 1,445,481 | 1,160,599 |
Total Inventory | $ 3,625,000 | $ 3,588,824 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Abstract] | ||
Permit of land use | $ 397,549 | $ 403,755 |
Building | 9,231,708 | 9,375,817 |
Plant, machinery and equipment | 26,245,097 | 26,309,262 |
Motor vehicle | 303,595 | 308,334 |
Office equipment | 216,093 | 217,058 |
Total | 36,394,042 | 36,614,226 |
Less: accumulated depreciation | (20,625,801) | (20,300,399) |
Property and Equipment, net | $ 15,768,241 | $ 16,313,827 |
Property, Plant and Equipment_3
Property, Plant and Equipment (Details 1) | 3 Months Ended |
Mar. 31, 2020 | |
Minimum [Member] | Permit of land use [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 40 years |
Minimum [Member] | Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 20 years |
Minimum [Member] | Plant, machinery and equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Minimum [Member] | Motor vehicle [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Minimum [Member] | Office equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Maximum [Member] | Permit of land use [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 70 years |
Maximum [Member] | Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 49 years |
Maximum [Member] | Plant, machinery and equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 10 years |
Maximum [Member] | Motor vehicle [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 10 years |
Maximum [Member] | Office equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Property, Plant and Equipment_4
Property, Plant and Equipment (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Property, Plant and Equipment (Textual) | ||
Depreciation expense | $ 647,113 | $ 772,861 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Intangible assets consisted solely of CFDA approved medical formulas as follows: | ||
Gross carrying amount | $ 4,764,738 | $ 4,839,117 |
Accumulated amortization | (4,570,964) | (4,633,506) |
Net carrying amount | $ 193,774 | $ 205,611 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Intangible Assets (Textual) | ||
Amortization expense relating to intangible assets | $ 8,808 | $ 22,622 |
Intangible assets useful life , description | NMPA approval is obtained over their individually identifiable estimated useful life, which range from ten to thirteen years. |
Related Party Transactions (Det
Related Party Transactions (Details) | Jul. 08, 2019USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | Jul. 08, 2019CNY (¥) |
Related Party Transactions (Textual) | |||||
Interest rate | 1.00% | ||||
Interest expense | $ 3,386 | $ 3,386 | |||
Other payables - related parties aggregate amount | 1,354,567 | $ 1,354,567 | |||
Other payables | 2,311,986 | 2,307,986 | |||
Other payables related parties | 742,880 | $ 717,419 | |||
Management [Member] | |||||
Related Party Transactions (Textual) | |||||
Interest rate | 4.35% | 4.35% | |||
Interest expense | 7,433 | $ 7,433 | |||
Other payables - related parties aggregate amount | $ 25,461 | ||||
Loan agreement to borrow cash | $ 674,405 | ||||
Loan agreement payable term | 1 year | ||||
Management [Member] | RMB [Member] | |||||
Related Party Transactions (Textual) | |||||
Loan agreement to borrow cash | ¥ | ¥ 4,770,000 |
Banker's Acceptance Notes Pay_2
Banker's Acceptance Notes Payable (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Banker's Acceptance Notes Payable (Textual) | ||
Maximum amount of agreement | $ 4,500,000 | |
Agreement payments fees, description | In addition, the agreement calls for the payment of fees equal to 0.05% of the note amount to the bank. | |
Banker's acceptance notes payable outstanding | $ 331,038 | $ 109,908 |
RMB [Member] | ||
Banker's Acceptance Notes Payable (Textual) | ||
Maximum amount of agreement | $ 30,000,000 |
Construction Loan Facility (Det
Construction Loan Facility (Details) | Mar. 31, 2020USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 1,975,978 |
2021 | 2,117,119 |
Total | $ 4,093,097 |
Construction Loan Facility (D_2
Construction Loan Facility (Details Textual) | 3 Months Ended | |||
Mar. 31, 2020USD ($) | Mar. 31, 2020CNY (¥) | Jun. 21, 2013USD ($) | Jun. 21, 2013CNY (¥) | |
Construction Loan Facility (Textual) | ||||
Construction loan amount | $ | $ 13,000,000 | |||
Description of loan interest rates | The loan bears interest based upon 110% of the PRC government’s eight-year term rate effective on the actual draw-down date, subject to annual adjustments based on 110% of the floating rate for the same type of loan on the anniversary from the draw-down date and its subsequent anniversary dates. The interest rate has remained at 5.39% on the anniversary dates which were July 10, 2017, 2018 and 2019, respectively. The loan required interest only payments for the first two years. Beginning July 11, 2015, the principal was due in at least two (2) annual installments with the first annual payment being due within six month period after July 10, 2015 and the second annual payment being due July 10, 2016 and each following year over the next five years through July 11, 2021 on the identical terms as described above for 2015. | |||
Principal amount | $ | $ 143,286 | |||
RMB [Member] | ||||
Construction Loan Facility (Textual) | ||||
Construction loan amount | ¥ | ¥ 80,000,000 | |||
Principal amount | ¥ | ¥ 1,000,000 |
Leases (Details)
Leases (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
2020 | $ 94,510 | |
2021 | 25,010 | |
Total undiscounted cash flows | 119,520 | |
Less: Imputed interest | (3,743) | |
Total Lease Liability | 115,777 | $ 140,007 |
Less: Operating lease liabilities, current portion | 90,974 | 91,306 |
Operating lease liabilities, net of current portion | $ 24,803 | $ 48,701 |
Leases (Details Textual)
Leases (Details Textual) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Leases (Textual) | |||
Operating leases cost | $ 22,229 | $ 23,346 | |
Cash flows from operating leases | 23,627 | $ 24,814 | |
Operating lease right of use assets | 112,447 | $ 136,779 | |
Operating leases liabilities | $ 115,777 | $ 140,007 | |
Weighted average remaining lease term | 1 year 3 months 8 days | ||
Weighted average discount rate | 4.75% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Income Taxes (Textual) | ||
Net operating loss carryforwards for PRC tax | $ 50,400,000 | |
Operating loss, expiration date | Dec. 31, 2025 | |
Valuation allowance for deferred tax assets | $ 30,461,103 | $ 30,759,656 |
Enterprise income tax rate | 25.00% | |
Net operating loss expiration, description | Approximately $21.6 million of these carryforwards will expire in December 2020. The Company also has net operating losses for United States federal income tax purposes of approximately $6.3 million of which $5.1 million are available to offset future taxable income, if any, through 2039, and $1.2 million are available for carryforward indefinitely subject to a limitation of 80% of taxable income for each tax year. | |
Description of federal corporate income tax rate | The U.S. Tax Reform significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
FairValueInputsAssetsQuantitativesInformationLineItems [Line Items] | ||
Banker's acceptance notes | $ 48,096 | $ 45,756 |
Total | 48,096 | 45,756 |
Fair Value, Inputs, Level 1 [Member] | ||
FairValueInputsAssetsQuantitativesInformationLineItems [Line Items] | ||
Banker's acceptance notes | ||
Total | ||
Fair Value, Inputs, Level 2 [Member] | ||
FairValueInputsAssetsQuantitativesInformationLineItems [Line Items] | ||
Banker's acceptance notes | 48,096 | 45,756 |
Total | 48,096 | 45,756 |
Fair Value, Inputs, Level 3 [Member] | ||
FairValueInputsAssetsQuantitativesInformationLineItems [Line Items] | ||
Banker's acceptance notes | ||
Total |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Stockholders' Equity (Textual) | ||
Common stock, shares authorized | 95,000,000 | 95,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
2010 Incentive Plan [Member] | ||
Stockholders' Equity (Textual) | ||
Common stock issued for equity awards | 4,000,000 | |
Restricted stock granted and outstanding | 175,000 |
Risks & Uncertainties (Details)
Risks & Uncertainties (Details) | 3 Months Ended | |
Mar. 31, 2020CustomerSuppliers / Number | Mar. 31, 2019CustomerSuppliers / Number | |
Raw Material Purchases [Member] | ||
Concentrations (Textual) | ||
Number of suppliers | Suppliers / Number | 2 | 3 |
Raw Material Purchases [Member] | Customer One [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 18.80% | 20.60% |
Raw Material Purchases [Member] | Customer Two [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 11.00% | |
Raw Material Purchases [Member] | Customer [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 45.20% | 26.70% |
Accounts Receivable [Member] | ||
Concentrations (Textual) | ||
Number of customers | 1 | 2 |
Accounts Receivable [Member] | Customer One [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 10.06% | |
Accounts Receivable [Member] | Customer [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 10.06% | 49.30% |
Sales Revenue, Net [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 10.00% | 10.00% |
Number of customers | 0 | 0 |
Revenue one [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 35.80% | 35.00% |
Revenue two [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 29.00% | 24.50% |
Revenue three [Member] | ||
Concentrations (Textual) | ||
Concentrations risk, percentage | 14.40% | 17.00% |
Subsequent Events (Details)
Subsequent Events (Details) | 1 Months Ended |
Apr. 30, 2020 | |
Subsequent Event [Member] | |
Subsequent events, description | The Company obtained a line of credit from Postal Savings Bank of China for an aggregate amount of RMB 10,000,000 (approximately $1.4 million), of which RMB 5,000,000 (approximately $0.7 million) have been advanced. The loan bears interest at a rate of 4.25% per annum. Advances on the line of credit are due two years from the date of the advance. A third party company has guaranteed the loan as being a second priority creditor in the collateral in certain land use rights and buildings next to the creditor of the construction loan facility as discussed in Note 8. In addition, the Company's Chief Executive Officer and Chair of the Board personally guaranteed the new line of credit. The Company has an additional RMB 5,000,000 (approximately $0.7 million) available under the line, subject to a risk review and approval by the third party guarantee company. |